OBJECTIVES: The Centers for Medicare & Medicaid Services (CMS) is considering issuing a proposed rule to implement an International Pricing Index (IPI) demonstration model over five years beginning in 2020 with the objective of decreasing the reimbursement rate of Medicare Part B drugs to closely align with international prices and lowering the overall Medicare Part B spend by 30%. We analyzed a list of 27 Part B drugs with the highest Medicare Part B expenditures to determine which of the 27 drugs would potentially be at risk for reimbursement cuts based on this model.

METHODS: We used methodology outlined by CMS to calculate a Medicare Part B target price for the 27 drugs. We determined the factor which when applied to the average international price give a target price such that there is 30% savings on overall Medicare Part B expenditures

RESULTS: From the 27 drugs, we determined that to achieve a 30% reduction in Medicare spend over time, a factor of 1.71 needs to be applied to the international price. With the IPI model, the percent reduction in Medicare Part B reimbursement rate varied greatly across the 27 drugs, ranging from 0% to 79%. For 10 drugs there was no decrease in reimbursement rate as the proposed IPI model would set the payment amount to the ASP for that drug resulting in no net change. The percent decrease correlated with the differential between the ASP and the average international price.

CONCLUSIONS: The IPI model proposed by CMS would have a significant impact on the reimbursement rate for the majority of high spend Part B drugs if implemented.